Concentrated stock has a reputation. The standard advice is almost reflexive. Sell it down, spread it out, get diversified.
That advice is right plenty of the time. It is also incomplete.
A concentrated stock position usually shows up for a reason. A founder who built the company and held the stock. An executive who was paid in shares for years. A family that bought into a stock two generations ago and watched it compound into something significant. The position is rarely accidental. It is usually the byproduct of something that worked.
Walking away from it has a cost that does not always show up in the conversation. The tax bill on a low cost basis. Trading windows and reporting rules for insiders. Estate strategies that depend on the basis stepping up later. Charitable approaches that work better with appreciated stock than with cash. Take any of those out of the picture, and the math on a sale changes.
None of that means concentration is not a risk. It is. And it has to be managed thoughtfully. The point is just that the answer is rarely as simple as the headline makes it sound.
The work is figuring out what the position is actually doing for the client, what it is costing them, and what the right path forward looks like with everything on the table.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Origins Private Wealth and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation.